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UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Consolidated Case Nos. 00-60805, 00-60806, 00-60807

BANK ONE, N.A.,

Plaintiff-Appellant,

VERSUS

EMMA BOYD, ROSCOE SHIELDS, STELLA REEVES,

Defendant-Appellees.

Appeals from the United States District Court

For the Northern District of Mississippi

April 5, 2002

Before REAVLEY, HIGGINBOTHAM and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge.

Bank One appeals the district court’s Orders of Abstention and

Dismissal. Bank One contends that the district court abused its

discretion in abstaining from exercising jurisdiction and declining

to rule on their Motions for Summary Judgment to Compel

Arbitration. For the reasons that follow, we agree. We therefore

vacate the district court’s November 7, 2000, Orders of Abstention

and Dismissal and remand these cases to the district court for

further proceedings consistent with this opinion.
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BACKGROUND

These consolidated cases arise from the sale and financing of

home satellite television systems. In the mid-1990s, Appellees

purchased satellite television systems from door-to-door salesmen

and telephone solicitors. Financing for the satellite systems was

provided by Bank One in the form of a revolving credit card

account. In conjunction with the sale, purchasers (hereinafter

"Cardmembers") were required to complete and execute a Credit

Application and Security Agreement. The Credit Application was

accompanied by a Revolving Credit Card Plan and Disclosure

Statement (collectively hereinafter "Cardmember Agreement"). The

Cardmember Agreement also contained an amendment provision,

permitting Bank One to change or amend the terms of the Cardmember

Agreement “upon fifteen (15) days prior written notice if required

by law.”

In March 1998, Bank One notified its Cardmembers of a proposed

modification to the Cardmember Agreement. The modification added

an arbitration provision to the Cardmember Agreement requiring that

all disputes, arising from or relating in any way to the Cardmember

Agreement or the Cardmember's account, be resolved by binding

arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-

16 (hereinafter "FAA"). Cardmembers who did not wish to accept the

arbitration provision could opt out by notifying Bank One, in

writing, on or before April 15, 1998, of their decision to reject

the new terms. Cardmembers who opted out pursuant to the terms of

the notice could maintain their accounts under the prior terms of

the Cardmember Agreement. None of the Appellees notified Bank One,

by the April 15, 1998 deadline, of their decision to reject the

terms of the arbitration provision.
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In October 1999, Appellees and a number of other plaintiffs

filed suit in Mississippi state court against Bank One and at least

thirteen other named defendants. Appellees' complaint asserted

that they were misled as to the nature of the financing of their

purchases of the satellite systems and claimed numerous causes of

action including fraud, conspiracy, negligence, and intentional

infliction of emotional distress. Sky Scanner Satellite, a codefendant in the state court proceeding, removed the suit to

federal district court where the action was remanded to the state

court in August 2000. In September, immediately following the

remand, Bank One filed individual suits against the Appellees in

federal district court seeking to enforce the arbitration provision

of the Cardmember Agreements pursuant to the FAA. On November 7,

2000, the district court issued a Memorandum Opinion and Orders of

Abstention and Dismissal. The district court reasoned that

abstention was warranted due to: 1) the state court’s concurrent

jurisdiction over the arbitration issue and ability to resolve

contract disputes including the enforceability of the arbitration

provision of the Cardmember Agreement; 2)the multiplicity of Bank

One’s related federal actions to compel arbitration; 3) the

possibility of inconsistent rulings in federal court; and 4) the

prior filing of the underlying state court action. Bank One now

challenges the district court’s ruling.

STANDARD OF REVIEW

We review a district court’s decision not to exercise its

jurisdiction for an abuse of discretion; its underlying legal

conclusions, de novo. See Safety Nat’l Cas. Corp. v. Bristol-Myres

Squibb Co., 214 F.3d 562, 564 (5th Cir. 2000). 
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ANALYSIS

Bank One complains that the district court erred in abstaining

from ruling on its motions to compel arbitration under the FAA.

Specifically, Bank One asserts that the district court misapplied

the abstention doctrine set forth in Colorado River Water

Conservation District v. United States, 424 U.S. 800 (1976), and

further elucidated in Moses H. Cone Memorial Hospital v. Mercury

Construction Corp., 460 U.S. 1 (1983). Bank One contends that the

district court’s abstention in favor of concurrent state court

proceedings constitutes an abuse of discretion in light of the

absence of exceptional circumstances warranting abstention and the

FAA’s liberal federal policy favoring arbitration agreements.

Appellees maintain, however, that the district court’s abstention

was appropriate because: 1) the state court action was filed first;

2) Bank One raised arbitration as an affirmative defense in its

answer in the state court action and has made no showing that the

state court is reluctant to hear the matter; 3) abstention by the

federal district court avoids piecemeal litigation resulting from

the multiplicity of Bank One’s federal court actions; 4) Bank One’s

filing of the federal actions is a vexatious attempt to harass

Appellees and avoid proper state court jurisdiction; and 5) the

interests of wise administration of judicial resources are best

served by permitting one state court judge to determine the issue

of arbitration for all plaintiffs in the single state court action.

The federal courts have a virtually unflagging obligation to

exercise the jurisdiction conferred upon them. Colorado River, 424

U.S. at 817. “Abstention from the exercise of federal jurisdiction

is the exception, not the rule.” Id. at 813. Abdication of the

obligation to decide cases under the doctrine of abstention can be
1Decisions of the Supreme Court have confined to three

general categories, the circumstances appropriate for abstention. 

Abstention is appropriate in cases presenting complex questions

of state law which affect policy issues of substantial public

concern whose significance goes beyond the result in the case

then at bar. See Louisiana Power & Light Co. v. City of

Thibodaux, 360 U.S. 25, 30 (1959). Abstention has also been

found to be appropriate in cases where, “absent bad faith,

harassment, or a patently invalid state statute, federal

jurisdiction has been invoked for purpose of restraining state

criminal proceedings, state nuisance proceedings antecedent to a

criminal prosecution, which are directed at obtaining closure of

places exhibiting obscene films, or collection of state taxes.” 

Colorado River, 424 U.S. at 816 (internal citations omitted). 

The third category of cases where abstention is appropriate

involve federal constitutional issues where a state court’s

determination of pertinent state law might render the issues

moot. See County of Allegheny v. Frank Mashuda Co., 360 U.S.

185, 189 (1959).

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justified “only in the exceptional circumstances where the order to

the parties to repair to state court would clearly serve an

important countervailing interest.” Id. The doctrine of

abstention generally applies only to cases involving

“considerations of proper constitutional adjudication [or] regard

for federal-state relations . . . in situations involving the

contemporaneous exercise of concurrent jurisdictions.”1 Id. at

817. The present case, however, presents neither a federal

constitutional question nor an issue of federal-state comity.

Nevertheless, it may still be appropriate for a federal district

court to refrain from exercising jurisdiction on considerations of

wise administration of judicial resources. 

“[T]he decision whether to dismiss a federal action because of

parallel state-court litigation does not rest on a mechanical

checklist, but on a careful balancing of the important factors as

they apply in a given case, with the balance heavily weighted in
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favor of the exercise of jurisdiction.” Moses H. Cone, 460 U.S. at

16. Factors relevant to the decision include: 1) which court first

assumed jurisdiction over the res; 2) the inconvenience of the

federal forum; 3) the desirability of avoiding piecemeal

litigation; 4) the order in which jurisdiction was obtained by the

concurrent forums; 5) whether and to what extent federal law

provides the rules of decision on the merits; and 6) the adequacy

of the state proceedings in protecting the rights of the party

invoking federal jurisdiction. See Colorado River, 424 U.S. at

818; Moses H. Cone, 460 U.S. at 23, 26; Black Sea Inv., Ltd. v.

United Heritage Corp., 204 F.3d 647, 650 (5th Cir. 2000) (citation

omitted). 

The first factor is not relevant to the present case as

neither the state nor federal district court have assumed

jurisdiction over any res or property. Although the second factor

is applicable to the case at bar, neither party has raised the

inconvenience of the federal forum as an issue. Because the

federal court and the state court are in the same geographic

region, we find this factor weighing in favor of the district court

exercising jurisdiction. The Appellees argue that the third

factor, the desirability of avoiding piecemeal litigation, weighs

in favor of the district court’s surrender of jurisdiction. The

district court acknowledged that the FAA “contemplates federalstate piecemeal litigation as a result of the filing of a federal

petition to compel arbitration of issues raised in a state court

proceeding,” and found this factor weighing in support of

refraining from exercising jurisdiction because of duplicative

litigation. The FAA, however, not only contemplates piecemeal

litigation, but “requires piecemeal resolution when necessary to
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give effect to an arbitration agreement.” Moses H. Cone, 460 U.S.

at 20. When concurrent jurisdictions exist between federal

district courts, the general principle is to avoid duplicative

litigation. Colorado River, 424 U.S. at 817 (citations omitted).

No such principle exists, however, as between state and federal

courts. Rather, “[t]he rule is well recognized that the pendency

of an action in the state court is no bar to proceedings concerning

the same matter in the Federal court having jurisdiction . . . .”

McClellan v. Carland, 217 U.S. 268, 282 (1910). 

The Appellees assert that the fourth factor to be considered,

the order in which jurisdiction was obtained by the concurrent

forums, weighs in support of the district court’s surrender of

jurisdiction because of the earlier filing of their state court

action. The district court also relied on the prior filing of the

underlying state court action to find support for declining to

exercise jurisdiction. The Supreme Court, however, has cautioned

against giving “too mechanical a reading to the ‘priority’ element”

and instructs that “priority should not be measured exclusively by

which complaint was filed first, but rather in terms of how much

progress has been made in the two actions.” Id. at 21. The state

court suit was filed in October 1999. Bank One, however, was not

served until May 2000. Furthermore, in November 1999, the state

court action was removed to federal district court and remained

there until it was remanded to the state court on August 23, 2000.

On September 7, 2000, Bank One filed the individual suits in

federal district court seeking enforcement of the arbitration

agreements. Indeed, the state court action was filed first in

time, but its progress relative to the federal suits calls into

question the weight attributed to this factor.
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The fifth factor, whether and to what extent federal law

provides the rules of decision, weighs in favor of the district

court exercising jurisdiction. Questions of arbitrability must be

addressed with a healthy regard for the federal policy favoring

arbitration. The FAA establishes that, “as a matter of federal

law, any doubts concerning the scope of arbitrable issues should be

resolved in favor of arbitration, whether the problem at hand is

the construction of the contract language itself or an allegation

of waiver, delay, or a like defense to arbitrability.” Id. at 24-

25. 

Appellees argue that the sixth factor, the adequacy of the

state proceedings, weighs in support of the district court’s

surrender of jurisdiction. The district court noted the state

court’s concurrent jurisdiction over the arbitration issue and

found it capable of resolving contract disputes, including

enforcement of the arbitration agreement. In addition, the

district court noted that Bank One raised arbitration as an

affirmative defense in its answer in the state court action but has

failed to pursue it by way of motion in the state court suit. We

agree with the district court concerning the state court’s

concurrent jurisdiction and adequacy to resolve the arbitration

issue. In light of the short interval of time, however, between

the district court’s remand of the underlying state court action

and the filing of Bank One’s federal suits seeking enforcement of

the arbitration agreements, we are less inclined to agree with the

importance that the district court has placed on Bank One’s failure

to pursue arbitration by way of motion in the state court action.

“[A]lthough enforcement of the [FAA] is left in large part to the

state courts, it nevertheless represents federal policy to be
2“The Arbitration Act is something of an anomaly in the

field of federal-court jurisdiction. It creates a body of

federal substantive law establishing and regulating the duty to

honor an agreement to arbitrate, yet it does not create any

independent federal-question jurisdiction.” Moses H. Cone, 460

U.S. at 26 n.32.

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vindicated by the federal courts where otherwise appropriate.” Id.

at 26 n.32.

The factors listed above do not represent a hard and fast rule

for determining whether abstention is appropriate, “but instead

describe some of the factors relevant to the decision.” Id. at 15.

Accordingly, Appellees argue that Bank One’s initiation of federal

suits to compel arbitration was a vexatious attempt to harass

Appellees and avoid proper state court jurisdiction. We disagree.

“[T]he pendency of an action in the state court is no bar to

proceedings concerning the same matter in the Federal court having

jurisdiction.” McClellan, 217 U.S. at 282. Bank One’s federal

suits to compel arbitration under the FAA are based on diversity

jurisdiction.2 Being properly in the federal court, Bank One had

“a right granted by Congress to have the court decide the issues

they presented.” Donovan v. City of Dallas, 377 U.S. 408 (1964).

We find nothing vexatious in Bank One’s resort to the federal

courts. 

The Appellees also contend that the interests of wise

administration of judicial resources are best served by permitting

one state court judge to determine the issue of arbitrability for

all plaintiffs in the single state court action. Similarly, the

district court found support for abstention due to the multiplicity

of Bank One’s federal court actions and the possibility of

inconsistent rulings. Although we find, in general, some support
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in these arguments for a district court’s surrender of

jurisdiction, in the present case, the Appellees’ desire for

determination of the arbitrability issue by a single state court

judge for all state court plaintiffs and the possibility of

inconsistent rulings fail to rise to the level of exceptional

circumstances as contemplated in Colorado River and therefore fail

to overcome the duty of the district court to adjudicate a

controversy properly before it. 

Applying all of these factors to the present case, presents us

with a close call. Indeed, “the decision whether to defer to the

state courts is necessarily left to the discretion of the district

court.” Moses H. Cone, 460 U.S. at 19. Yet such discretion must

be exercised in accordance with Colorado River’s exceptional

circumstances test. Although the case law on important factors

warranting abstention is not clearly defined, the Supreme Court

cases do provide guidance. The determination of whether abstention

is appropriate requires a case by case analysis balancing the

factors involved in any given case with the obligation to decide

cases properly before the court. On balance, the factors present

here weigh in favor of exercising jurisdiction. We therefore find

that the district court abused its discretion in refraining from

exercising jurisdiction and declining to rule on Bank One’s motions

to compel arbitration. 

The Appellees also contend, alternatively, that in the event

that this Court finds the district court’s abstention

inappropriate, that they are entitled to discovery prior to a

ruling on Bank One’s motions to compel arbitration. The Appellees

further contend that if abstention was inappropriate and they are

not entitled to discovery, Bank One is not entitled to an order
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compelling arbitration. In support of this contention, the

Appellees have asserted a number of contract defenses to the

arbitration provision of the Cardmember Agreements. The district

court, however, did not reach the merits of Appellees’ request for

discovery or contract defenses and we decline the invitation to

examine them.

CONCLUSION

For the reasons discussed above, the district court’s November

7, 2000, Orders of Abstention and Dismissal are vacated and these

cases are remanded to the district court for further consideration

on the merits of Appellees’ request for discovery and contract

defenses.

VACATED and REMANDED.